Virgin America Finally Comes to Chicago

Virgin America has been talking about serving Chicago even before its first airplane took to the skies. Now, 37 years later, it is finally rolling into O’Hare. This should be a good route for the airline, but why is it just starting it now? There are a lot of reasons, but ultimately, it can thank Delta.

But when it tried to go to O’Hare, it said it couldn’t find gates. That’s not entirely true. It could have operated out of the international terminal, but it didn’t want to pay the higher costs and it didn’t want to have to use buses to get to airplanes. (Apparently all the gates in that terminal would have been full during some desired departure times.) It also could have gotten itself gates from legacy airlines at the airport, but I’m sure it just didn’t want to pay the price of admission. So it waited . . . and waited.

What’s changed? Concourse L, that’s what. O’Hare has a problem in that it controls very few of the gates at its own airport. The rest are on long term leases to airlines. So when a new airline wants to come into the airport, O’Hare can’t really get very involved in that process other than to facilitate discussions. Then an opportunity came up with Concourse L.

Delta controlled the 11-gate concourse L in Terminal 3 at O’Hare. When it merged with Northwest, it opted to move into Terminal 2 and take over the old Northwest gates instead. That left Terminal 3 with plenty of room. Six of those gates are actually leased out to American already. (American controls the rest of Terminal 3.) But those other five gates were in limbo as Delta worked on a deal.

Just last week, Delta agreed to turn over Concourse L to O’Hare. American will still use those six gates, but now the airport controls the other five. That opened the door for Virgin America to come in for a lot less than it would have had to pay otherwise. It also leaves the door open for others to come in as well, if they cared. It doesn’t have to stop there. That particular concourse has a little room to add on a couple of gates if they get creative enough, so there could be a nice operation there for anyone who wants the gates.

Now Virgin America will start service May 25 with two daily flights to LA and 3 to SFO. As you can imagine, this is not enough to take a big bite out of American and United but it can still do well. It’s the same problem the airline had when it went into Dallas. It brought a knife to a gun fight. Let’s look at this visually:

If Virgin America wants to be a real competitor, it needs to fill out its schedule more. For example, if you want to come to LA, you can leave O’Hare at 845a or you have to wait until 715p. It’s hard to really take a chunk of the market with a schedule like that. But that doesn’t mean Virgin America can’t do well here. Like Dallas, this is a market that should work for the airline if it’s going to be able to survive at all. It’ll be awhile before we see any meaningful data on these routes, but this is one of those markets that I’ll want to watch closely.

In the meantime, enjoy those low fares. Virgin America has decided to jump in with a $99 fare each way.